Australian geothermal aspirant Geodynamics has rekindled hopes of developing its Innamincka hot rock geothermal projects after signing an agreement with Beach Energy that could see geothermal energy used to power gas and oil development in central Australia.

The so-called “farm-in” agreement signed by Geodynamics and Beach Energy, a backer and shareholder in a rival geothermal development with Petratherm, will give Beach Energy “exclusive access” to Godynamics’ reserves around Innamincka.

Geodynamics last year completed a pilot program on a 1MW geothermal production plant at Habanero, 10kms south of Innamincka – the first in the country to use “hot rock” technology, and the first time in the world that such a deep resource (4,200m) had been extracted.

The company said then that it would negotiate with some of the gas producers in the area for a power purchase agreement, a critical element of funding for a small commercial plant, and to access up to $90 million in previously allocated funding from the Australian Renewable Energy Agency.

Gas producers need both heat and power for the gas production process and Geodynamics CEO Ben Ward – a former gas industry executive – says the company will also look at using CO2 emitted during the gas production process as a heat transfer fluid in the geothermal process.

This initial research program is to be completed within 12 months and Beach Energy will contribute $200,000 towards the cost of the research program.

Ward says there is potential for significant energy efficiency improvements, cost benefits and carbon emission reductions through the integrated development of the geothermal resource and a future gas development.

Getting a commercial customer was a key component of its ARENA funding requirements, and the options for Geodynamics were limited, as Beach and Chevron are the only two big companies with acreage that overlapped that of Geodynamics.

“We have been very consistent with our message, which is that we had to find a local customer that can underwrite and underpin the next stage of development,” Ward told RenewEconomy.

Ward said that the potential head and power load for a major gas development was significant, potentially in the “hundreds of megawatts”. He said it was critical that Geodynamics engaged with potential producers at the early stage of development.